If you've know anything about MAXfunds, you know that we think load funds are bad and no-load funds are good. These days, however, determining if you are paying a sales commission when you buy into a mutual fund is more difficult then you may think. There is no boldface text on the application that says "This is a load fund". The load information is hidden in complex fee tables deep in a document most investors don't even glance at, the prospectus.

Mutual funds come in two basic forms: with built in sales commissions (loads) or without (no-loads). Determining which one you are buying can be confusing. Our own informal research has determined most people who own a load fund don't know they paid a sales commission.

Each and every fund in each and every model portfolio can now be purchased on Scottrade’s no transaction fee (NTF) platform, which means that investors can buy and sell them without paying a fee of any kind. We synched our portfolios with Scottrade’s platform because Scottrade has the highest number of funds available for sale without transaction fees.

Since few systems to predict the many ups and downs work consistently, the practical solution is to stay invested at all times. The only way to time the market is to spend as much time in the market as possible. 

Blanche from Florida asks:

The rivalry that exists between active fund people and index fund people is a long and bitter one, and has been growing in intensity ever since Vanguard's John Bogle launched the first index fund, the Vanguard 500 Index Fund (VFINX), back in 1976. Supporters of index funds think active fund owners are suckers who pay higher fees for worse performance. Active fund owners consider index fund owners over-diversified, risk-averse wimps.

I want to be very careful here, Blanche. Because of the highly controversial nature of your question and the potential for harm an incomplete answer could cause on one side or the other, I'm going make sure to respond to it as carefully and completely as I can.

An index fund is a mutual fund that tries to mimic, as closely as possible, the holdings of a particular index. Depending on the fund, the index tracked might be the S&P 500 Index, the Dow Jones Industrial Average, the Wilshire 5000 Equity Index, the NASDAQ Composite Index, or any one of the scores of other indexes that have sprung up over the years.

An actively managed mutual fund doesn't follow an index. Active managers build their funds one company at a time, through painstaking research and analysis. The job of an active fund manager is to identify and buy the very best stocks that fit their fund's prospectus objective.

Both actively managed and index funds have aspects to them that are good, and aspects that are not so good. In our MAXadvisor Newsletter model portfolios we invest in both index and actively managed funds. Which one is 'better' depends on who it is that is buying the fund, what that person hopes to achieve with the money they place in the fund, and even the markets conditions that exist during the life of the investment.